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Essential reading:

Tomislav Skračić, MA Undergraduate English Course for MARI TIME MANAGERS 6th Semester. Essential reading: T. Skračić, Waypoint – English Textbook for Maritime Students, Pomorski fakultet, Split 2010, Units 29-33 T. Trappe & G. Tullis, Intelligent Business , Longman 2005.

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Essential reading:

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  1. Tomislav Skračić, MAUndergraduate English Course forMARITIME MANAGERS6th Semester Essential reading: • T. Skračić, Waypoint – English Textbook for Maritime Students, Pomorski fakultet, Split 2010, Units 29-33 • T. Trappe & G. Tullis, Intelligent Business, Longman 2005

  2. Shipping companymergers and acquisitions Unit 32

  3. Complete the text below with the adverbs:also, at the same time, finally (x2), firstly, furthermore (x 2), hence, meanwhile, moreover, on the other hand. • During the past twenty years there has been a significant increase in the number of shipping company mergers and acquisitions and operational alliances for various reasons and in differing situations worldwide. Here are some of them. • Profit margins are getting lower. In recent years low freight rates have eroded profit margins and this has been worsened by high voyage and operating costs. Unit 32

  4. Complete the text below with the adverbs:also, at the same time, finally (x2), firstly, furthermore (x 2), hence, meanwhile, moreover, on the other hand. • This includes fuel, crew, loan interest or mortgage repayments, port charges, survey and maintenance costs and so on. ____________________, ship replacement costs have increased substantially, partly because of more extensive technology. Vessels tend to increase in size and become more productive in use in many trades. This increases the capital outlay per ship. Such capital costs are beyond the reach of many shipowners, especially the family business company. Unit 32

  5. Complete the text below with the adverbs:also, at the same time, finally (x2), firstly, furthermore (x 2), hence, meanwhile, moreover, on the other hand. • ____________________, competition continues to increase in many trades, with many foreign-going vessels operating under state subsidised conditions, especially through fuel subsidies, soft loans, port subsidies, crew subsidies and so on. ____________________, ship management skills are becoming more diverse and professional. __________________ there is a need for very high calibre management at all levels, which may prove difficult to acquire and sustain in a smaller company, especially with the ISM Code cost implications. Unit 32

  6. Complete the text below with the adverbs:also, at the same time, finally (x2), firstly, furthermore (x 2), hence, meanwhile, moreover, on the other hand. • Usually the merger or acquisition is based on financial or competitive reasons. Here are some of the basic advantages flowing from a merger or acquisition. • ___________________, it raises capital and thereby enables the new enlarged company to have greater financial resources for investments, opportunities and competitive strategies. ___________________, a merger or acquisition often results in considerable cost saving through the rationalisation of common departments such as PR, I&T, naval architects, etc. Unit 32

  7. Complete the text below with the adverbs:also, at the same time, finally (x2), firstly, furthermore (x 2), hence, meanwhile, moreover, on the other hand. • ____________________, it can lead to the rationalisation of berths. It is now possible to have a common berth at individual ports and not two or three berths as hitherto. • ____________________, the larger company can attract a stronger management team with more diverse professional skills. This aids development of the business and especially helps to facilitate the expansion of the company. Unit 32

  8. Complete the text below with the adverbs:also, at the same time, finally (x2), firstly, furthermore (x 2), hence, meanwhile, moreover, on the other hand. • A merger or acquisition can help diversification of business activity. Diversification may be to a related business such as a travel agency or to a non-related one such as real estate. ____________________, a larger merged company has a bigger market share. This tends to increase its dominance in the marketplace, especially in cash flow and influence on prices, developments and innovations. It also increases the market value of the business. ____________________, marketing is decisive in ship management today and marketing is more cost effective through a larger company than a smaller one with a limited market share. Unit 32

  9. Complete the text below with the adverbs:also, at the same time, finally (x2), firstly, furthermore (x 2), hence, meanwhile, moreover, on the other hand. • ____________________, the merger or acquisition may result in the company becoming multinational. To conclude, the importance of company mergers and acquisitions cannot be overstressed in a period of great change and opportunity in the industry. It is likely that the ISM Code will hasten such change. Unit 32

  10. Use these structures to complete the text: areas of business, cost effective,lack of capacity, government bodies, negotiating position, on the one hand, revenue base. ADVANTAGES OF A MERGER / ACQUISITION The larger company, which has been created through acquisition or merger, has a stronger competitive base and a bigger customer and ____________________. It also obtains new market entry options. It can penetrate new ____________________ which would not have been possible if the companies remained separate entities. Moreover, the dominance of the larger company is also apparent in market development. It helps to attract volume business, which the smaller operator cannot because of ____________________. It also has greater influence with trade associations, shippers' councils and ____________________ in negotiations. Unit 32

  11. ADVANTAGES OF A MERGER / ACQUISITION Finally, the larger company can have a wider international base, particularly when two companies of differing nationality merge to form a joint management company. ____________________ it enables the new company to work towards common aims and rationalise resources where this is ____________________, but on the other, it permits each party to retain its ____________________ with its national government, trading associations and, for example, third party ship management. • Use these structures to complete the text: areas of business, cost effective,lack of capacity, government bodies, negotiating position, on the one hand, revenue base. Unit 32

  12. Mergers and acquisitions of shipping companies in 1997. Unit 32

  13. Answer the following questions: • Define the terms: 1) acquisition, 2) merger, 3) joint venture. • In your opinion, what is the greatest adventage of the acquisition/merger of companies? • Look again at the table above and say: • How much did NOL pay for APL? • When was China Shipping Group created? • When did P&O Nedlloyd take over Blue Star? • What happend in February 1997? • Why are profit margins getting lower in shipping industry? • What do operating costs include? Unit 32

  14. Answer the following questions: Why are capital costs today beyond the reach of many small shipowners? What is the adventage of being state subsidised? Why os the implementation of the ISM Code costly? How and where can savings be obtained through an acquisition or a merger? What is the adventage of diversification of business activity? Why is marketing important in ship management? Can you name an aquisition or a merger of any companies that has recently taken place in your country? Unit 32

  15. Translate into English. • Croatian Line i naša tvrtka ušli su u zajednički poslovni poduhvat (started a joint venture) nazvan Management Services. • Zadnjih godina niske vozarine (freight rates) smanjile su profitne marže (profit margins). • MSC je otkupio 45 postotni udio (45 per cent stake in) Kenya National Shipping Linea. • Veća udružena (merged) kompanija ima i veći udio tržišta (market share). • Mnoge strane brodare (shipping companies) i brodogradilišta subvencionira (subsidised by) država. • Veća tvrtka ima bolju pregovaračku poziciju prema (with) svojoj vladi, udrugama brodara i međunarodnim organizacijama. Unit 32

  16. Spajanje je omogućilo ulazak u nova poslovna područja (areas of business) što ne bi bilo moguće da su te dvije kompanije ostale odvojeni subjekti (separate entities). Koji su najvažniji resori (departments) u brodarskoj kompaniji? Varirajuća cijena krcanja goriva (bunkers / bunkering) u različitim lukama svijeta znači da pažljivo planiranje može dovest to (make) znatnih ušteda. ISPS Code je razvijen kao sredstvo (as a means of) povećavanja svijesti o sigurnosti (security awareness) na brodu i u lukama. DPA i CSO trebaju iskrenu i punu (wholehearted) podršku zaposlenika i višeg rukovodećeg osoblja (senior management), inače će borba protiv terorista i gusara biti tek mrtvo slovo na papiru (dead letter). On također može biti nadležan za (in charge of) internu ili vanjsku kontrolu (audit). Unit 32

  17. Unit 32

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